Will mid-priced apartments become extinct?

With the amended Land Law, the removal of the land price framework and the application of market value will result in landowners needing to change the land use purpose having to pay taxes up to 10 times higher when the regulations officially come into effect.

The amended Law on Real Estate Business also has some notable points that could benefit buyers and indirectly filter out unqualified developers. These include a regulation requiring buyers of apartments and houses under construction to only pay a 5% deposit – meaning the project developer must be legally sound and financially sound; and a regulation mandating that developers fulfill their financial obligations before selling – giving buyers peace of mind when making a purchase.

All transactions must be settled through a bank, including real estate transfers; the transaction price must be accurately recorded, helping to limit the practice of buying and selling properties at two different prices. In addition, developers are only allowed to collect 50% of the property value until handover, whereas previously it was 70%.

In addition, regulations prohibiting land subdivision projects in Type I, II, and III cities require project developers to build houses and complete infrastructure before selling. However, people are still allowed to subdivide land in accordance with the law and the minimum plot size regulations.

Meanwhile, the amended Housing Law stipulates that people of Vietnamese origin have the right to receive real estate transfers in Vietnam. This will attract remittances to Vietnam and greatly facilitate investment and home purchases for overseas Vietnamese.

The law also expands the eligibility criteria for purchasing social housing by allowing students and other individuals to buy social housing, and by giving priority to developers building social housing in terms of land use fees and land leases.

At the program, Ms. Yen Nguyen, Head of Research and Consulting at CBRE Vietnam, predicted that apartment prices are unlikely to decrease in the near future. This is because many reputable developers with strong financial resources already possess clean land plots; projects must complete all legal procedures before construction can begin. Therefore, developers will have no reason to sell their products at average prices, but will be forced to sell at market prices.

"The mid-range apartment segment will become 'extinct,' and the mid-range segment will no longer be profitable for developers. It is predicted that in the near future, apartments in Ho Chi Minh City will only be available in the high-price segment. Mid-range products will not appear until at least after 2026," Ms. Yen stated.